Carl,
"seems as though you have a moderately bearish count going on here..."
You win the understatement of the year award with that one! ;o)
I must take issue with the labeling of the '87 collapse as cycle wave 2 in the series of 5 waves from the 8/82 supercycle beginning. Sure, '87 was larger in percentage decline on the indices than '94, but compare the duration of the declines. '87's decline was over in a flash (a "flash knockdown"... so to speak). But '94's decline was grueling, lasting the whole year.
What's hidden in the '94 numbers is the fact that that correction was sector rotational in nature. Sure, the senior indices only fell 10 to 15%, but you'd be hard pressed to find a stock during that time that didn't have a decline of 30 to 40% or greater, making its actual effect on individual stock holders just as devastating as the '87 episode, with one additional caveat: Prices stayed down for a full year, whereas a couple months after the '87 collapse, prices were moving strongly upwards again (albeit from much lower levels). The fundamentals in '94 provided a great deal of underlying support as well, as company's earnings began to accelerate out of the '90 recession, making the P/E's look ridiculously low during the '94 correction. In '87, you had a currency related crisis (dollar vs. mark) that left a gaping hole in underlying support, allowing that decline to drop further than it otherwise would have.
'97 proved to be another sector rotational cyclical correction, with index prices not doing much more than 15 to 20% on the downside, but most individual stocks suffering 30 to 50% or more. That correction drug out longer than any since '82 as well, except for '94, proving that it was something more than the typcial primary correction.
Other points:
- The previous wave 4 area support area for a correction is just an observance of a common occurance. It's not even close to being a mandatory guideline for the correct labeling of waves.
- I'm unaware of any Ewave rules that require corrections of larger degrees be greater in percentage decline than corrections of smaller degree in the same set. Isn't it obvious that duration is more important than size ? (That's what she said!!)
- Have to disagree with possiblility of rally from June 15th-July20th of this year being a "B" Wave, as it was a clear cut 5 wave move higher
These are all pertinent points you made. But I believe you should consider emphasizing duration of correction more in your analysis versus size and the meeting of arcane guidelines that are sometimes applicable, and others not. And yes, there will ALWAYS be more than one possible wave count... But ONLY 1 turns out to be correct (although even incorrect ones can make you $$$ sometimes, as we've both been forunate beneficiaries of).
Warm Regards,
David |
